Simplifying Financial Complexity: Gaby Lahoud's Approach to Analytics

Hannah Mitrea 0:05
Get ready to get your questions answered by financial advisors. Learn how to put more money back in your pockets, regardless of where you’re starting your financial journey with your host, Hannah Mitrea. Hello, everyone. Welcome back to the virtual US financial advisor podcast, I’m super excited to have Gabby LaHood here with me, Gary is the CEO of be certified pro LLC, and also serenity advisors, LLC. So welcome to the show.

Gaby Lahoud 0:32
Thank you very much, Hannah, it’s good to be here.

Hannah Mitrea 0:35
Yeah. And I’m really excited, because we’re gonna be kind of talking about, you know, financial analysis, financial modeling, and really how businesses can make the best decision for their investment. Or people can make the best investment decision based on the data, which is a little different than some stuff we’ve talked about previously. But before we jump into that side of it, or a little bit about your company, and how you got into this financial side of it,

Gaby Lahoud 0:58
perfect first. Hi, everyone. I’m glad to be here. And I hope you enjoy today’s session and get the maximum value out of it. Actually, I started in the accounting field, but I thought that this is too boring, or it’s too routine. So I wanted something that is more creative, something that adds value, something that is not bounded by principles or standards. So that’s why I entered into the analytics field, I started jumping from one company to the other gaining international experience. Eventually I become became a CFO and one of the companies that I decided to do it by myself and start my own company to be able to help other companies and other individuals to start or make their business successful. And that’s when I started gaining and learning all of these certifications, including EMA, the CFA, the CSEA, the PMP, Argus and many others. And that’s how I got the field.

Hannah Mitrea 1:49
Yeah, and I’m pretty sure like, correct me if I’m wrong. I think you also help other people kind of get some of these designations.

Gaby Lahoud 1:55
Yeah, yeah, sure. True. Also, I’ve been teaching for more than 15 years now. And I have my other business which is be certified Pro, helping this all over the globe to earn the CMA certification the CFA certification, we have already agreements with many institutions such as the IMA such as backer action back rehab, sorry, well, with Wiley with Gleim, with many institutions around the world, up to our agreements with the with some have agreements with many ICA AICPA societies within the US trying to help also CPAs better CPA exam. And we’ve been giving a lot of scholarships around the world, helping universities also to give a better insight or career path for all of their students, once they hit the actual market, which is the business market instead of just what they learn in books. So

Hannah Mitrea 2:50
I love that, like I have a teaching spirit to where I help people learn how to do marketing all around the world. And just understand those skills. I love that you’re doing that in the finance world and helping them get the certifications to excel themselves and also help their clients by having that knowledge. And I know I saw it on your YouTube because I was looking on there. So you know, anybody that’s listening, that wants help, definitely check out his YouTube, we’ll make sure to have all of his information in the show notes later on for you as well. But let’s kind of like jump into it. I know, one thing we kind of talked about is technology and kind of assessing that gap between you where we’re actually at as a company, versus how like we’re perceived where we’re at. And so I’ll share with me a little bit about that and how we can overcome it and what we need to do, right,

Gaby Lahoud 3:34
actually, technology is not something new, where we know that for many years, technology has been advancing definitely not in the current speed or pace, it was a bit slower. But still, technology has always been there in terms of computers, in terms of internet, ERP systems, and so on. Even artificial intelligence in one way or another was embedded in certain type of products or programs or software’s or products. So the biggest problem that I’ve been seeing here in the US, even in Europe, the Middle East, I work internationally. So I have clients from all over the globe, even with big companies that you say, Oh, that’s a known company. That’s a big manufacturing company. That’s a big car company, that’s a big service company, they are investing millions of dollars in ERP systems. But then you see they rely heavily on Excel or they still do things manual and you say you’re investing so much money in that software. They say okay, not everybody know how to use it, it’s easier, it’s faster this way, something that is more familiar. So everybody’s panicking now with AI that’s going to take a lot of jobs definitely that what has been happening when when they invested the machine labor went down, they are relying more on machines, but life moves forward. So that’s why skills are shifting and the demand in the market is shifting to new type of industries or new type of positions or to new types of skills. This has always been there even now with AI The issue is that you need to know how to use AI you need to know How to provide the right command or to ask what exactly you need to be able to get what you need. So start with that you’re gonna rely a lot on analyst on web developer on data analysts to be able to provide you with what you need. And in addition to any other programs, so even if you go to companies that are international, that are worth billions, if not trillions of dollars, you see, they still rely on basic stuff. And that’s going to continue, I don’t think it’s going to be like, Oh, tomorrow, we’re going to use AI, then we’re going to stop using our ERP system, we’re going to stop using our Excel and so on. So there’s a big misconception between Oh AI is taking over or technology is taking over technology has been here for that long. And still, you see a lot of people that are still slow, and adapting to new technology or using this new technology. So I think we’re fine. But people need to know which type of skills they need to be able to cope with this change in the market. That’s all what they need. And this by the way, this is a great thing, a disruption in the academic world, I see a lot of I teach in universities, that many, many majors, the number of students enrolling in such majors is going down like crazy, because I don’t know if that’s gonna be a good decision in terms of finding the right job or the right career in the future. So that’s why they are shifting or they’re still looking to find any new type of career or new type of major that they can enroll at.

Hannah Mitrea 6:30
Yeah, I think AI definitely a lot of people here, like, we all fear it a little bit. But like you mentioned at the beginning, AI has been around for a while. And I always like remind myself of that, especially if you look at a Word document, a Word document telling you that your word is misspelled that was AI that we’ve been using for decades now. And so AI has always been a part of the things we’re doing it just in a new way. And just like you said, you have to tell it commands. And that isn’t instant, like, there’s definitely been a learning curve and just learning AI myself on you know how you ask a question before, you would just ask it and wait for the answer. And it would say I can’t do this or shoot something out. That made no sense. Whereas now it’s providing the details, in a sense, and really structuring that question correctly. But being in like education, you know, somebody is listening to this, I want to get into finance, what is the path you would tell them to take with AI coming into the market? Would you still the same path they should have taken, you know, four years ago? Is that the same path today, with the new technology?

Gaby Lahoud 7:37
That’s actually a tough question to answer depending on definitely their major or their career, they are in accounting and finance and art. And I don’t know going to law school, whatever it is. But whatever the major is, the skill is moving from the technical part of it to the analytical part of it. So even if they are going into accounting, eventually, they need to understand how the financial statements work, how the transactions work, to be able to analyze it and provide a feedback. So you don’t expect from someone who just graduated to be able to provide top notch feedback. So it’s a learning curve. And what I believe the whole education systems should change. It’s not that the majors should change, or people should enroll less. The education system should change. It’s not like this is what the book says, This is how you should do it. Okay, try to be creative, more creative, have an open ended questions cases, show actual cases, how things have been evolving and where we could be at in the future and how we can use everything we’re learning, including the new technology that’s coming in, to be able to add value because an employer wants added value. If you’re not providing this added value to the employer. He doesn’t care if you have 100 certifications or one certification, they want added value, they want to make more money. It’s all about wealth accumulation. So as long as the company is taking this value from that employee, this employee becomes valuable. So it’s what they provide that defines their lovin in the organization, their salary, everything other than that, I don’t think they should worry much even when they finish their BA they need to take maybe a professional certification or global certification short certifications, try to learn from others on how to do things do their own research. For example, I learned Excel I learned financial modeling. I learned that analytics from from YouTube as simple as that. So I didn’t go to anyone. I started researching and asking questions that might be asked to me as an owner of a business or even before when I was still an employee that what if my employer asked me to do this, how can I start researching and testing or this is the best way to do it? And when they asked me Oh Gabby have been doing that for so long. So you know, this is the first time I do it. In real life. I’ve been trying to do it before based on my dummy scenarios. That’s

Hannah Mitrea 9:59
like I 100% agree, like YouTube has taught me so much in my own field. And it’s just, it’s more going out learning what you need to learn versus book smarts directly. But talking a little bit about, you know, understanding some of these documents that we’re seeing and some of the things we just need to know. So financial analysis versus financial modeling, like how does a person look at that whenever they’re trying to make the best decision for their, their company? Let

Gaby Lahoud 10:26
me share I have a couple of can you see my Excel sheet? I can? Yeah, that’s the dummy case. Definitely can’t share any of my clients cases. But we do a lot of financial modeling for companies. And actually, companies love it, because they need to make decisions. They need to make decisions fast. And, you know, people don’t stay on the first opinion, or the first thing that comes to their mind. They say, what if, what if? What if, what if? What if that happened? What if this happened? What if I want to reach that level of net income? But what if the market went up and inflation just kicked in again, and the prices went up? How should I react to that? So this is a small scenario on certain financial statements. When I started building financial statements, many years ago, I don’t 20 years ago, I used to build the financial statement. And when someone asked me, oh, Gabby, I need you to increase the number of units sold by that much, or I need to adjust the commission that’s going to be paid for my team by that much, or I need to do this, then I need to redo the whole financial statement all over again. So by creating something similar to that, where here you have all the input, I have, for example, 10 scenarios, I can do 100 scenarios, I don’t care. And you can see with each scenario, your net income, what that will be, you can put the gross profit or anything or even a cash flow. And without even having the financial reports. So I only have one p&l For the base case. Okay, but it’s everything is automated. So I’m using all of these cases. And I can go here and say, Okay, I want scenario number two, and then my base case will be based on scenario number two, which is based on this, given the number of units sold the price, and even I can have 100 variables that I can change, what if I want here number six, and this will affect also based everything on number six. So in addition, I can have my gross profit below where it’s showing you where I’m going to be indifferent within the selling price and purchase price, because eventually, if you’re selling below your cost, you’re gonna make losses. So you need to make sure that you’re always making an additional profit to counter any expected expenses or unexpected expenses or losses in the future. So for example, if I put scenario number three, it’s showing me that this way, if I sell it for $20, and the cost for my goods was $6, I’m gonna reach the same gross profit as if I’m selling by 21. And it’s gonna cost of seven. In addition, it’s going to build a sensitivity analysis, which is very important, and it will help me to set my budgets, because sensitivity is going to tell me which item is more sensitive to changes than others. So where I should ensure that the numbers do not differ much from what I’m budgeting, or what I’m saying, and this is going to be the starting point for my selling for my sales team for my project management, and from other teams, and I can create, for example, a tornado analysis, then it will eventually kicked in into breakeven analysis, and so on. So that’s a small thing that can be built to help companies to make the right decisions. Because if the company cannot see more than one scenario, more than one variable changing, they might make a decision. And eventually that decision will lead to the failure of that project or that product or that service, and that it will fall back on the company.

Hannah Mitrea 13:41
Yeah, so like, I love a Google sheet or an Excel sheet. That’s like my love language. So seeing all those numbers, like makes me happy. When you click something, it does something else. But what kind of business? Is having a report like this beneficial to? Or is it something that almost any business or company should be creating? Yeah,

Gaby Lahoud 13:59
for this type of analytics, every single business that I’ve been doing that for so long, I do it for universities, for real estate, for service companies, manufacturing, training, whatever the businesses, but whatever the line of business is, everybody needs to see if things because everybody prepared budgets for next year, everybody has a certain target that they need to achieve, to grow the business. So by understanding these factors, things will be easier to maneuver. And when you see that, if that goes down to this level, then I’m going to be in trouble or I won’t be able to reach my target, then you set certain countermeasures ahead of time you’re being proactive instead of being reactive. And this way, you can ensure that eventually, more or less, you’re going to achieve your target.

Hannah Mitrea 14:45
And so how would somebody look at this, that kind of am analysis and really be able to make decisions off of them like what is the best investment they should be doing and how they should be going about that? Very

Gaby Lahoud 14:58
good question. That’s based on The culture and the strategy of the company everything is based on a strategy. So what we are trying to achieve? Are we trying to go global? Are we trying to increase our market share? Are we trying to increase our profits? Are we trying to reduce the level of competition? Are we trying to show or provide a certain quality to the investor or the customer that we are a high quality product, we are a cheap product or an expensive product. So this will help companies to make such decisions if they need to hire more employees, if they need to invest in AI, for example, will it be worth it? If I asked them this, how much will I save what will happen here and there. And I’m going to show you another financial model that everybody loves, which is the dashboard, everybody wants dashboards, but they don’t need to buy an ERP system that cost a lot of money. So with this dashboard, you can see we are an international company, actually, that’s based on one of my clients, but it’s not the actual numbers so to violate here, so they have businesses all over the globe. And they can see year after year, how their businesses is spreading, in which countries they are getting better and which country they are getting worse, they can see all of these reports in a dashboard. That’s loading slowly. So I have too many funds open. But yeah, for this type, so I just can press here, and they can see only this type and all of their analytics, and so on. So they can they can choose they have a dashboard where they can choose from and that’s based on Excel, you don’t need a highly sophisticated software. And that would actually bi business intelligence. And they are doing they are collecting all of this information, summing it up and providing you with a small concise summarized, aggregated feedback that this is what happened, this is how things are moving. This is what’s happening, what’s going on here. If I want to know only 2021, or I want only to see these product groups versus that. So you can just pick and choose and you will get the output that you are looking for. So that’s another way of looking at things from a visual perspective, instead of just numbers. And you can make better decision or see where you are heading within your by area. For example, by type of product by salesperson, the sales team doing better in this product doing better in this product exiting the market or sales are going down due to competition or preferences in the

Hannah Mitrea 17:21
market. So as like a new business owner, that’s like, Okay, I want to kind of project and understand where I’m headed. So there’s a lot of this data is being pulled them, like you said, from AI and other business insight reports, or are we looking more at direct past. And so this is something that they might not even be able to create for a year or two down the road.

Gaby Lahoud 17:44
Mostly for new businesses, right, we’re talking more or less, okay, again, I’m gonna share something we’ve done for a client, again, fictitious numbers, he was trying to open a business in a new country. So totally new to that country. And he didn’t know if you need to go with that or not actually, he ended up we recommended not to go into it based on the analysis and all of the scenarios that we ran. So this is type of investment decision. So if you need to invest in a business to say, I want to start a business, I’ve done that for my businesses, what are the costs and things that I need to take care of? What are the things that I need to be aware of what are the challenges in the market, and that’s not only quantitative, actually qualitative is very important. For example, one of our clients wanted to open in a country. And he he hired another company to do the financials, the financial great, but there was one big problem legally, he cannot open this type of business in that country. So one small qualitative aspect, he made the decision, so you don’t even need to go to the financials, and he just invested for nothing. So this is a small example of a feasibility study. Or you can call it whatever you want or business plan depending on the stage that you are at. But let’s just call it a scenario analysis and the feasibility study. So it’s a mix of both, where you have multiple scenarios, then you can change the numbers, for example, as you know, he wants in order to even I can change the variables here to make better decisions. So if I, if I want to invest for 15 years, and they want to see if it’s worth it or not, and when I will be able to break even, and if I need to get subsidy from the government or not, or the government, for example, here, the government was planning to be a partner in that project, and that they will provide, for example, some tax breaks. So making something dynamic because they were spending a lot of time they already spent around eight months trying to figure things out and they were weren’t able to make a decision. So we prepared this financial model. And the decision was made in two hours. Six, seven months of work versus just two hours because it was that easy. What if I worked for 15 years and they go to the p&l? The p&l will automatically let me just enlarge it, it will stop at 15 years with the projection and tell them what will And the balance sheet the same thing, it will stop at 15 years cash flow free cash flow everything. What if I want 60. And I just put 16 years and assess the p&l, it’ll automatically populate year 16. We can put two scenarios next to each other, in addition to checking the free cash flow to firm free cash flow to equity before tax after tax, and based on the discount rate that we’re putting is going to show them along with other sensitivity variables. So what if my discount rate was less instead of keep changing that, but if I go into scenario to where it has 13% versus 20 years, $6 million, I’m going to put 60, instead of 55, it’s gonna be 25%, government profit shares to the government was 25, instead of 20, and so on, it’s gonna start with 15, or 13, I mean, and adjust accordingly, to chant up and down, and the p&l will automatically populate up to 20 years. So it’s much easier with the taxes with everything that’s going to be paid to the government, with the balance sheet, cash flow, free cash flow, and so on. So that’s a simple thing that will simplify whatever because you know, when you’re sitting with an investor or with a client, or you’re sitting with the CEO, or CFO, when you tell them, Okay, if you go this way, that’s what will happen. They say, Okay, what if I do that you say, Oh, give me a week, or give me a couple of days, or give me an hour or two hours? Let me change the numbers and then come back. And then you come back, and they say, Okay, what if I do this, and then you get to go and come back. And that doesn’t work. Nobody has this luxury of time, they want to make decisions on the spot. So that’s one of the things that we keep things simple. For example, your share, the government share is going to be out of revenue, or out of EBT. Let me choose back scenario one. So that will affect my, let’s say, after dash free after cash free cash flow, if it’s going to be from EBT, it’s going to be around $12 million. If it’s going to be from revenue, it’s going to be even more if it’s gonna be from net income. So everything is adjusted accordingly automatically, without them trying to say what if, what if what if I can put here the tax rate as 15% instead of 25, and bumped up to 14 million instead of 13, or 12 million, because I’m paying less taxes, and the tax is starting at your six, they can say it can start at any year, so that you do, I’m going to have less because I’m paying taxes starting year two instead of your six. So it makes things that easier to make any decision.

Hannah Mitrea 22:27
Yeah, and definitely can see the value and being able like especially if you’re looking to buy a company or invest in something really having this data report and the financial analysis of where you’re gonna go for it, because it makes a decision easy, if I’m putting 5 million, but I’m not gonna see any return on investment. And at that it’s small 15 years down the road, what’s the point? And then investment? So really being able to look at that? What are kind of like the pros and cons of doing some of these and data analytics in a business. So is there cons to it?

Gaby Lahoud 22:58
Yep, there are a lot of pawns garbage in garbage out that the your data that you’re collecting is garbage, no matter what the financial model is, what the software is, what the system is who is doing it, your outcome is going to be as garbage as your input. So that’s why we have a lot of meetings with the client we have, if they want us to do our own market research, many prefer that we do it, we try to collect as much data as possible to be able to come up with a better input so that our output is good. That’s that’s one thing. The second thing, actually, it’s all about time constraint and resources of the company. So they say, Okay, I want to go into that, but they don’t have the resources or the capabilities to go into that. So these should be assessed, again, that analytics is all about the system that you are using. And I see a lot of companies, they don’t trust that ERP is even they are structured wrong, or whoever structured it doesn’t understand the business properly, or some of the things are not properly structured within the ERP there P is great, but how to structure it because every ERP is customized to the business itself the line of business. So if your system the process is wrong, even if your input is right, you’re gonna get the wrong output, because it’s structured in a different way, knowing which data you need to use which data is useless. So relevant versus irrelevant data that that is a big, big, big question. So you need to assess every single one. It’s not just oh, I have all of this data, and means I’m going to have a better outcome No, just need the quality versus quantity definitely the pros. As we have seen him. It provides faster output, it provides better decisions that takes into consideration risk. Assess multiple scenarios at the same time. It provides insight into what should we do to prevent problems in the future or if we face certain problems, how we can face them, and actually increase the ROI the return on investment or the IRR of the organization by investing in the right place, even if you’re investing in employees, is it worth it or not? So I’m not going to pay 100,000 or 50,000, or whatever the salary, you’re paying for that employee on a yearly basis, and you’re not getting the van. So we’re talking about something that’s small versus something, should I invest in this $1 billion project or not? So everything boils down and to how fast you can make decisions. Time is money. And you see top tier executives, they don’t have time to waste, they want things fast. Okay, what if? What if? What if, what if, as long as you are being able to provide all the answers in a very short period of time, you are worth it?

Hannah Mitrea 25:37
Yeah, no, like, just thinking of it. Like, I’m already thinking in my head, especially when he mentioned like employees like being able to do this cost analysis and financial analysis on it to really make sure it’s making sense, do we really need the next person on our team? Or is it just something that we think we need, but let’s really look at the data, but the same time making sure it’s good data that’s coming in and not garbage data? Because at the end of the day, we can all just put a number on a sheet. And go, that looks good. So with that kind of being said, how do we make sure the person that we’re going to this may be building these? Or how do we make sure the data we’re getting is accurate? Because you know, AI isn’t always 100% accurate sale. So how do we make sure that data is good data going in diversification

Gaby Lahoud 26:21
having more than one employee assess it, and many organizations would go with getting an external, professional to assess things from the outside, because when you’re involved into the details, the devil lies in the details, when you’re too much embedded in the details, you lose the big picture, you can see things quite in the right way that you should see it. And actually, you cannot assess things in the right way. So it’s always good to get an industry expert or tried to find someone from outside of the company to take a look to assess the data to reassess everything to reassess the system maybe. And what I usually used to do when I was working at organization not working as an entrepreneur or consultant that I used to consult other departments. So even if I’m in the finance department, if that’s a project that involves project management, or whatever, I used to consult them and see their point of view on the subject. Consult other departments sometimes talk to experts in the field, from a general point of view without sharing any confidential or without them knowing what I’m about to do. So that’s always a good idea. And definitely, I don’t trust AI currently with the data that they are providing, because they are just scraping information from everywhere and just giving you a summary of it, or they’re building based on this. They are they are building new data. So if I don’t trust again, garbage in garbage out if the data that they are collecting, which I don’t know from how they are getting this data, if it’s if it’s not trustworthy, then it’s not going to be the right decision that I want. That’s why you see many people that are using chat GPT, or board or any other AI, they readjust things unless they know nothing about the subject. And they are taking things as they are.

Hannah Mitrea 28:02
Yeah. So for somebody listening to this, that’s like, I really need to create some financial analysis for themselves. Who is that ideal person that you work with? Who is that person that should come to you to get these analysis done?

Gaby Lahoud 28:15
Actually, I have a team that do all of this stuff, I do it myself, I’ve been a financial model for more than 20 years now. So they can reach out to us to support at Realty advisors.net. Or just send me an email directly if that is your Gabi JPY LaHood, L A H O ud@gmail.com. Or they can reach out to any of our companies, I don’t know if you can post them. So I’ll give you all the information you can reach out to us through any of our emails. And we’ll be more than happy to help you build your financial models, do your valuation feasibility studies, financial analytics, trainings, so whatever you need, we’re willing to help you achieve it. So

Hannah Mitrea 28:58
I will say thanks so much for sharing this, before we jump off here, is there any other thing that you think would be really important around the data analytics and financial analysis that you think a business owner or company should now

Gaby Lahoud 29:10
definitely data trimming and that filtering, or just make sure that you don’t just have data there, okay, just make sure that your data is properly structured. Otherwise, you’re gonna just store and use all of this information for nothing, and it’s gonna take you forever to find what you need. I have one of my clients, they have three ERP systems, they have their own files, and whenever they need something, they can never find it. And even if they find something, they don’t know if that’s the final version, that’s the one that they should use or not. So be organized. organized data is the best thing be as efficient in utilizing the data or keeping the data that is needed and just remove or make proper versions or put final This is the final version, which makes it easier because I see a lot of people waste time trying to extract the right data and they Eventually, sometimes they end up using the wrong version or the wrong file.

Hannah Mitrea 30:05
Alright, awesome. Thanks so much, Gabby for joining us and anyone listening. We’ll have all of his information in the show notes below. So you’re able to click a link or email him directly. And thank you so much for joining me today.

Gaby Lahoud 30:16
Michelle, nice to be here. And thank you for everyone for listening.

Hannah Mitrea 30:21
Thank you for joining us. This week on the virtual US financial advisor podcast, subscribe to the show on Apple podcasts, Spotify, Stitcher, or via RSS, so you’ll never miss an episode. We’d love rating on iTunes. Or better yet, tell a friend about the show which will help us grow as well. If you want to learn from any of our financial advisors, head over to our website virtual US financial advisor.com To learn more about each financial advisor and connect with them personally. Be sure to tune in next week to get more advice from the expert financial advisors. See you in the next episode.

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